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White paperThe challenging and changing world of retail customer preferences

» Players need to understand the true impact of the mobility and social media revolution, and develop response strategies now to meet the growing demand.«

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Contents

Introduction 2 Results from Survey 3The Implications of the Research 10About AIIA 11About AIIA’s Financial Services Network 11Thought Leadership Papers 11

White paper The challenging and changing world of retail customer preferences

http://www.fujitsu.com/au


www.fujitsu.com/au | www.aiia.com.au

The AIIA wishes to thank their Financial Services Thought Leadership partner, Fujitsu.

Fujitsu Australia and New Zealand is a full service provider of information technology and communications solutions. Download the AIIA Financial Services White Papers.

Authored By:Martin North, Executive Director, Industry Group, Fujitsu

Editorial Contributors:Charles Lindop, Chair, AIIA Financial Services Committee. Chair AIIA NSW Branch.

Media contact: [email protected]

AIIA Head Office: 39 Torrens Street, Braddon, 2612 ACT p: 02 6281 9444, e: [email protected], w: www.aiia.com.au

8 March, 2012

About this paper:

IntroductionAIIA Financial Services Thought Leadership Paper

Page 2 of 9

This paper summarises recent research into the changing channel preferences of customers using financial services in Australia. It also draws out some of the implications for players in the sector, and makes some suggestions for priorities for the business and technology stakeholders in the industry.

In the last 18 months, something has fundamentally changed. Consumers are flocking to new smart mobile devices, including iPads and iPhones, and other wireless platforms. In parallel there has been the rise and rise of social media, online communities and a proliferation in accessible content. However, Fujitsu wanted to understand if all customers were equally attracted by these trends, and whether there was sufficient momentum to challenge the traditional channel use patterns of customers of financial institutions in Australia. This is an important question, because if a critical change in underway, then the relative investment and technology priorities of players may need to flex.

So we surveyed 26,000 consumers over the past 12 months, seeking information about their channel preferences and expectations. We segmented the market into eleven customer groups, driven by multi-factorial elements based on affluence and lifestage:

We defined a range of activities through the product life cycle, from search, apply, transact and service; noted which channels customers preferred to use; and also asked about their experiences, expectations and device preferences.

Affluence

Life Stage

9. Multicultural Establishment

7. Wealthy Seniors

5. Exlusive Professional

6. Mature Stable Family

8. Suburban Mainstream1. Young Affluent

2. Young Growing Family

3. Rural Family

4. Battling Urban 11. Stressed Seniors

10. Disadvantaged Fringe

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Across our eleven segments there is significant variation in channel preference and service expectations. Average channel preference by segment is shown in the chart below:

We then examined each segment in more detail.

Page 3 of 9

The resultsfrom the survey

Average channel preference by segment

0 10 20 30 40 50 60 70 80 90 100

1. Young

Affluent

2. Young Growing

Family

3. Rural

Family

4. Battling

Urban

5. Disadvantaged

Fringe

6. Surburban

Mainstream

7. Matur Stable

Family

8. Exclusive

Professional

9. Multicultural

Establishment

10. Stressed

Seniors

11. Wealthy

Seniors

Average

■ Phone ■ Self Service ■ Advisor ■ Branch ■ Online




www.fujitsu.com/au | www.aiia.com.auPage 4 of 9

The Young Affluent are predominately onlineThese households are mainly using mobile communication devices including smart phones and iPads to connect to the online world. They use personal computers less now days. They are on average connected for 14 hours a day. They spend a considerable proportion on their online time on social media sites (38%) and Media sites (24%). They are heavy users of internet banking services (13%). They are using branch and phone banking less then in 2007.

Selected quotes from our research:“I rely on my social network for advice on my banking”. “I like to read the finance blogs to see what others are doing”“I do not understand why I can’t apply for a mortgage from my ipad”“I use the Domain App to track new properties and do a virtual inspection”“My iPad has replaced my pc as my always on device”“The banks are not on my wavelength”“Security issues get in my way; I want a simple approach, not separate SMS messages”

Young Growing Families are more Multi-Channel users, though with a strong emerging online preference.

1. Young Affluent

Advisor ApplyAdvisor Service

Online Search

Advisor Transact

Online ApplyPhone Service

Online TransactPhone Transact

Online ServicePhone Apply

Branch SearchPhone Search

Branch ApplySelf Service Device Service

Self Service Device Transact Branch Transact

Self Service Device Apply Branch Service

Self Service Device Search

Advisor Search

20%10%

0%

30%40%50%60%70%80%

2. Young Growing Family


Online Search

Advisor Transact









Advisor Search

20%10%

0%

30%40%50%60%70%80%




www.fujitsu.com/au | www.aiia.com.auPage 5 of 9

Rural Families are Branch and Phone Orientated.households are restricted in choice because online wireless services are less assessable away from the main urban centres. NBN roll-out may eventually lead to a wider range of service options.

Battling Urban Households Are Strongly Branch Orientated

3. Rural Family


Online Search

Advisor Transact









Advisor Search

20%10%

0%

30%40%50%60%70%80%

4. Battling Urban


Online Search

Advisor Transact









Advisor Search

20%10%

0%

30%40%50%60%70%80%




Page 6 of 11 www.fujitsu.com/au | www.aiia.com.auPage 6 of 9

Disadvantaged Fringe Households Are Branch and Phone AlignedThis household group is less likely to use smart mobile devices and are much more comfortable with branch and telephone based services. They are less able to afford the new devices, and are less interested in emerging consumer technologies.

Young Growing Families are more Multi-Channel users, though with a strong emerging online preference.Suburban Mainstream households are Digital Migrants. They are heavy users of personal computers and laptops. They are on average connected for 8 hours a day. They spend some of their online time on social media sites (13%) and Media sites (11%). They are heavy users of internet banking services (17%). They are using branch and phone banking somewhat less then in 2007.

Selected quotes from our research:“I use internet banking but I worry about ID Theft and security”. “My kids use social networks, but I do not, can’t see the point”“It’s unlikely I will replace my pc because I don’t want to have to learn a new device” “I still like talking to a real branch person, but use the internet if I have to”“I like the SMS alerts I get when I want to make a transfer”



Online Search

Advisor Transact









Advisor Search

20%10%

0%

30%40%50%60%70%80%

6. Surburban Mainstream


Online Search

Advisor Transact









Advisor Search

20%10%

0%

30%40%50%60%70%80%





Mature Stable Families Are Multi-Channel Users, With Strong Online Momentum

Exclusive Professionals Are Highly Online Orientated



Online Search

Advisor Transact









Advisor Search

20%10%

0%

30%40%50%60%70%80%

8. Exclusive Professional


Online Search

Advisor Transact









Advisor Search

20%10%

0%

30%40%50%60%70%80%





Multicultural Establishment Are Branch Dependant

Stressed Seniors Are Branch and Phone AlignedThese households do not have the appetite to acquire new technology; this is partly because of the costs involved, and also the lack of interest.



Online Search

Advisor Transact









Advisor Search

20%10%

0%

30%40%50%60%70%80%

10. Stressed Seniors


Online Search

Advisor Transact









Advisor Search

20%10%

0%

30%40%50%60%70%80%




Page 9 of 11 www.fujitsu.com/au | www.aiia.com.au

Wealthy Seniors Are Multi-Channel AlignedThese households are moving quite quickly to become more online and mobile device aligned. Their adoption rates are accelerating.

11. Wealthy Seniors are multi-channel aligned


Online Search

Advisor Transact









Advisor Search

20%10%

0%

30%40%50%60%70%80%




Page 10 of 11 www.fujitsu.com/au | www.aiia.com.au

Our findings highlight that some segments have already moved into the mobile online world. In their eyes, the financial services industry is not moving fast enough to meet their expectations. Early adopters are already using social networks as part of their buying decisions, and trust their network more than the banks. They also expect to do more banking online including being able to compare products and fulfil on line. These segments also happen to be some of the most profitable for the industry.

As this trend continues, we see the ongoing migration away from phone and branch potentially leaving these traditional channels with stranded costs and lower utilisation.

There are profound implications for the industry:

1. Players need to understand the true impact of the mobility and social media revolution, and develop response strategies now to meet the growing demand. This will include the need to offer a broader range of services online, and tackling all the security, back-office, and business process changes which are required to deliver such services as well as new technology advances.

2. They need to consider their channel strategies, and how they will rebalance branch and phone services in the light of online. The recent spate of new branch opening may be replace by upcoming closures as online continues to rise. The branch will increasingly become a ghetto for segments which are not technology savvy, and the costs of running this bricks and mortar infrastructure will be harder to cover as profitable customers leak away to the new channels.

3. The Social media revolution will require additional capabilities to be developed, not just to monitor the blogsphere for references to their organisation, but to consider how to being to sell products and services, and deliver online service through these new mediums. Early experimentation will need to be replaced by main stream strategic development.

The implicationsof the research

Rela

tive

Prof

itabi

lity

Online Take UpLaggards

Low

Hig

h

Main Stream Early Adapters


7. Wealthy Seniors

5. Exlusive Professional


8. Suburban Mainstream

1. Young Affluent2. Young Growing Family

3. Rural Family

4. Battling Urban

11. Stressed Seniors





Australian Information Industry Association (AIIA) is the nation’s peak industry body for the technology sector. AIIA sets the strategic direction of the industry, influences public policy and provides members with productivity tools, advisory services and market intelligence to accelerate their business growth.

AIIA member companies employ 100,000 Australians, generate combined annual revenues of more than $40 billion and export more than $2 billion in goods and services each year. With member companies right across the country, from every sector of the industry and representing every size of company, AIIA is truly the ICT industry’s association of choice.

About AIIA’s Financial Services NetworkAIIA established the Financial Services Business Network for executives interested in technology-led innovation in the financial services industry. Join us to:■ Understand the innovation opportunities in financial services ■ Facilitate networking between the innovators in financial services

and the suppliers of technology solutions ■ Discuss and create technology-led business opportunities in

financial services and facilitate deal making

Join our LinkedIn GroupJoin our AIIA website Group

Thought Leadership PapersIn partnership with specialist companies from across the ICT industry, AIIA releases regular Thought Leadership pieces in the financial services arena.

Download the AIIA Financial Services White Papers

AboutAIIA

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In collaboration with About FujitsuFujitsu Australia and New Zealand is a full service provider of information technology and communication solutions. As the third largest ICT company in the Australian and New Zealand marketplace, we partner with our customers to consult, design, build, operate and support business solutions. From strategic consulting to application and infrastructure solutions and services, Fujitsu Australia and New Zealand have earned a reputation as the single supplier of choice for leading corporate and government organisations. Fujitsu Australia Limited and Fujitsu New Zealand Limited are wholly owned subsidiaries of Fujitsu Limited (TSE:6702).

ContactFujitsu Australia and New ZealandAddress: Level 16, 15 Blue StreetNorth Sydney, NSW, 2060, AustraliaPhone: +61-2-9113 9200Fax: +61-2-9113 9222E-mail: [email protected]: www.fujitsu.com/au2012-02-29-FAL-EN

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